Chase Tower escapes auction block

September 18, 2012|By KELLI STOPCZYNSKI | WSBT-TV

SOUTH BEND -- South Bend's tallest building is apparently closer to new ownership while it continues to be plagued with financial problems.

The Chase Tower narrowly avoided the auction block Tuesday when the county treasurer received a check in the mail from the building's original owner, Dillingham Hill Real Estate, paying $344,775.25 in back taxes.

The county property tax sale is scheduled for Thursday morning on the fourth floor of the County-City Building and this isn't the first time the troubled Chase Tower has narrowly escaped the sale.

"It's been close to the final buzzer situation," said County Treasurer Sean Coleman of the two other times the building's owners almost didn't pay property taxes on time.

In fact, Coleman added, Dillingham Hill's last property tax payment before Tuesday's was in March 2011.

It's just the latest in a slew of problems for the building, but one sign of good news for the building could come with a potential new owner.

An interested buyer signed a contract and put earnest money down on the building, said HREC Investment Advisors Vice President Tom Sommer. He described that contract as being in a "due diligence" period until the first week of October, which essentially means the buyer could back out any time before then and only lose the down payment. But if that date comes and goes and nothing happens, the deal will be that much closer to becoming official.

Sommer declined to name the buyer or give any more information.

Ken Herceg knows the building better than most and is one of very few tenants still left who will talk about the building with news media.

"She's got good bones, but her arteries and veins and some of her electrical systems, her nervous systems need to be revamped," he said. "So, she needs a lot of help."

Herceg owns Ken Herceg & Associates Inc., an engineering, architect and land surveying firm. He's been a tenant on the 21st floor of the tower since 1994.

"The only thing I can say is I'm a structural engineer and I'm 280 feet above the street every day. And I come and I go very confidently. So structurally, I don't have any problem with this building," he said.

Still, it's been a rough couple of years for Herceg and others who chose to ride out the building's troubles.

The building went into court-appointed receivership 19 months ago after Dillingham Hill filed for bankruptcy. That receiver is from Ohio, but according to court documents is represented by a local attorney. Court documents show no recent legal activity with the receiver other than a monthly financial report he submitted June 19.

A crumbling parking garage, old pipes that caused flooding and unreliable elevators are just a few of the concerns raised by Chase Tower tenants and customers. Those problems caused some tenants to move out. Earlier this summer, The Summit Club, a restaurant on the top floor, closed its doors.

The hope now is that a new owner steps in and is willing to put money toward repairs on the building.

"This building is a centerpiece in this city. It has been since what, 1970. We can't just ignore it," Herceg said.

Chase Tower came close to a sale late last year, but a Chicago developer backed out when the city refused to give him taxpayer money to help with repairs to the building.

South Bend's Community and Economic Development director, Scott Ford, said he is aware a sale is "in the works" and said the buyer is "a group that has demonstrated success with properties like Chase Tower," but added "the city is very much on the sidelines" with the current deal because it is a private building being sold through a private entity.

The sale could be official as early as November or December, Sommer said. However, Ford added the court involvement and bankruptcy problems could create unforeseen issues.